NEW YORK (Reuters) - JPMorgan Chase & Co's possible $11 billion settlement of government mortgage probes has been complicated by a dispute with the Federal Deposit Insurance Corp over responsibility for losses at the former Washington Mutual Inc, said people familiar with the matter.
The dispute, between the largest U.S. bank and the FDIC, could leave the federal agency on the hook for billions the bank is expected to pay as part of the settlement and substantially reduce the amount of the penalty JPMorgan actually pays to the government, some analysts said.
JPMorgan is seeking a "global" settlement of federal and state mortgage-related probes that could involve a payment of $7 billion in cash plus $4 billion for consumers, according to other people familiar with negotiations.
Last week, Chief Executive Jamie Dimon met with U.S. Attorney General Eric Holder to discuss a possible global settlement, and a source said the broad outlines could be reached any day. JPMorgan is also in talks with the U.S. Securities and Exchange Commission, the U.S. Department of Housing and Urban Development and the New York Attorney General's office.
JPMorgan, which acquired Washington Mutual from the FDIC for $1.9 billion at the height of the financial crisis, has disputed its responsibility to cover losses incurred by investors on the failed thrift's mortgage securities.
The bank has said in corporate filings and court proceedings in recent years that its liability is limited when it comes to reimbursing investors who lost money on Washington Mutual mortgage-backed securities.
The FDIC is disputing the matter in court.

Some fear the FDIC, under pressure from the Justice Department to join a global settlement, might agree to assume liability, a move that would effectively force another government agency to absorb billions of dollars in losses.
Spokesmen for both JPMorgan Chase and the FDIC declined comment. A Justice Department spokeswoman was not immediately available for comment.
"If the FDIC were to indemnify JPM as part of the government deal, it would likely reduce the rumored $11 billion by about $3.5 billion," said Joshua Rosner, managing director of Graham Fisher, an independent research consultancy. "That would be an absurd outcome."
An indemnification, Rosner said, would put JPMorgan's losses back on the FDIC, five years' after JPMorgan and the FDIC claimed that the transaction came at no cost to the FDIC.
Rosner estimates that an indemnification deal for JPMorgan would force the FDIC to assume $3.5 billion in claims against JPMorgan by the Federal Housing Finance Agency over Washington Mutual mortgage securities. Sources have said the FHFA claims against Washington Mutual are part of the global settlement negotiations.
John McDonald, a senior analyst at Bernstein Research, said in a research report the issue may be tough to resolve, because the agreement JPMorgan signed with the FDIC when it bought Washington Mutual does not specify which party - JPMorgan or the FDIC - is responsible for Washington Mutual's alleged breaches of representations and warranties in securitization agreements.
The FHFA sued JPMorgan in September 2011, accusing the bank of misleading Fannie Mae and Freddie Mac in their purchase of billions of dollars' worth of risky mortgage securities.
The regulator said JPMorgan falsely represented that the mortgages underlying the securities met underwriting standards. The securities were sponsored or underwritten by the bank, or two other companies it acquired, Bear Stearns Cos and Washington Mutual Bank.
The dispute has played out in a 2009 lawsuit filed by Deutsche Bank National Trust Co. claiming $6 billion to $10 billion in damages from Washington Mutual's alleged breach of representations and warranties in mortgages pooled into securities.
The FDIC has claimed it should be dismissed from the lawsuit and Deutsche Bank's claims should be against JPMorgan.


http://thehill.com/blogs/regwatch/finance/325581-mccain-scolds-holder-for-meeting-jpmorgan-chief-

McCain scolds Holder for meeting with JPMorgan chief

By Julian Hattem - 09/30/13 05:03 PM ET
Sen. John McCain (R-Ariz.) is worried that Attorney General Eric Holder is meeting with the head of JPMorgan Chase while the Justice Department prepares a reportedly multi-billion dollar settlement agreement with the bank.

In a letter on Monday, McCain expressed his concern about last week’s meeting and urged Holder to act swiftly to hold individuals at the bank accountable for its handling of mortgage-backed securities ahead of the 2008 financial crisis.

“Your personal meeting with the CEO of the corporate target of a major criminal investigation, at the request of the CEO, while negotiations on a global settlement agreement are pending, is highly unusual and, under the circumstances that the meeting occurred, gives rise to concern,” McCain wrote. 

“It is noteworthy that at the same time the bank is facing a litany of regulatory woes that carry hefty fines and potential liability in private civil suits, individuals within JPMorgan and other similarly culpable financial institutions have escaped accountability.”

JPMorgan's chief executive, Jamie Dimon, reportedly met with Holder at the Justice Department on Thursday, days ahead of an expected settlement announcement that could be as high as $11 billion.
Negotiations over the charges have been ongoing for about a year.

Earlier in September, JPMorgan admitted wrongdoing and agreed to pay $920 million to settle charges about the “London Whale” series of derivative trades. 

After that announcement, McCain was one of a number of lawmakers who complained that the Securities and Exchange Commission did not go far enough to charge individual traders responsible for the $6 billion in losses stemming from the deals. 

On Monday, he asked Holder to be tough on the bank.

“In matters involving major corporate malfeasance, individual accountability is vital to deterring similarly severe misconduct by financial institutions and their officers, directors, or key employees in the future,” he wrote.
“Government enforcement actions must no longer be viewed by institutions and their management teams as simply the cost of doing business.”





http://www.housingwire.com/articles/27162-big-bank-ceos-to-meet-with-obama-on-shutdown


Chief executives of the nation's top banks will meet with President Barack Obama on Tuesday as Wall Street pushes Congress to reopen. The meeting's VIP list includesGoldman Sachs (GS) CEO Lloyd Blankfein, JPMorgan Chase (JPM) CEO Jamie Dimon and Citigroup’s(C) Michael Corbat.
The White House visit, confirmed by three people familiar with the schedule, was set up by the Financial Services Forum, a trade group representing the CEOs of the 19 largest banking and insurance firms. The executives are also set to meet with Treasury Secretary Jacob J. Lew and several lawmakers.
The CEOs plan to discuss the White House’s negotiations with Congress over funding the government and raising the U.S. debt ceiling, said the people, who spoke on condition of anonymity because details of the meeting were still being worked out.